From a ‘Named Driver Policy’ to the use of telematics data to reclassification of vehicles, depending on what they are used for, a working group of insurance regulator IRDAI had made as many as 24 recommendations on the own damage (OD) segment of motor insurance.
Suggesting the ‘Named Driver Policy’ for private car and motorcycle policies, it said, “vehicle plying on the road is a risk, but the driver who drives the vehicle is a key determinant of the risk.”
Such a move is part of an effort to make pricing reflect risk, which is an international practice. Opting for driver information in a policy will help integrate information from government authorities, particularly about traffic violations. Having information about drivers, with details such as age and gender would help assess the risk better. Over time, with access to drivers’ or their driving habit data, insurers will be able to develop sharper risk-based underwriting practices.
Also, the insurance firm will pay the claim amount in full only if the named driver was at the wheel. Another recommendation was adoption of telematics for motor insurance. Use of telematics or tracking devices will monitor the driving habits such as acceleration, and braking and will provide feedback to the driver. Auto owners only pay the premium aligned to their driving profile and thus avoid paying for coverage based on one-size-fits-all system. Telematics will eventually pave the way for a ‘Pay As You Drive’ and ‘Pay How You Drive’ model.
It also recommended that the basis for rating shall be the vehicle’s torque rather than cubic capacity. It noted that two-wheelers deployed by e-retailers, including app-based food delivery firms, were a separate risk category but under the current MV Act there was no provision for their registration as ‘goods carrying vehicles’.
